Alexander Fernandes recalls being “frugal to the extreme” as a young businessman, eschewing expensive cars and trips to Mexico in favour of living “basically like a monk.”
Before he founded Vancouver-based Avigilon Corp. (TSX:AVO), the CEO knew he would first have to squirrel away as much money as he could to finance his own high-tech ventures.
Over the past year, though, the high-definition video surveillance systems developer could not be described as tight-fisted with funds.
Avigilon has spent more than US$100 million acquiring patents since late 2013 and even entered the real estate game last month with the purchase of a new headquarters in downtown Vancouver.
And while revenue has grown 956% to $178 million over the past five years, financing the tech company’s high-growth path has required additional measures.
In April 2014, Avigilon closed a bought deal valued at $100 million – one of the largest corporate transactions in B.C. for the entire year.
“You need money to make money,” Fernandes told Business in Vancouver.
The $100 million deal followed the company’s decision to make an initial public offering in 2011, which raised $20 million at the time.
Fernandes added there’s always a tension between making investors happy with short-term profit while also ensuring a company is able to finance long-term growth and foster both sustainability and competitiveness.
“The tricky part is making sure your dollars are spent wisely,” he said.
Meanwhile, quantum computer maker D-Wave Systems Inc. has taken a different route – one more typical of early-stage tech companies – when it comes to financing its expansion plans.
In a region where the tech sector often laments the lack of access to capital compared to San Francisco or even Seattle, the Burnaby-based company closed two private placements totalling more than $60 million last year.
CEO Vern Brownell said in December the latest round of financing helped expand its patent portfolio and put the company on track to developing an even more advanced computer. So far, the company has raised $177 million to fund growth.
But major expansion plans in the tech industry, and the financing needed to fund them, are also afoot for Vancouver’s few anchor companies.
In May, Telus (TSX:T) announced it would invest $2.8 billion across B.C. over the next three years to boost infrastructure and increase Internet connectivity in both urban and rural areas.
The Vancouver-based telecom giant followed through on that promise, raising $2.2 billion through different notes offerings in 2014.
It was also the company that, as it prepared to move into downtown Vancouver’s $750 million Telus Gardens, sold off one of its adjacent towers to none other than Avigilon back in February.
So while Avigilon spent $42 million on a nine-storey building – a move not common for tech startups that typically rely on leased space to remain flexible in the early stages – the cash-flush company is confident big moves requiring significant financing are needed to retain clients and draw in new ones.
“If you stand still, somebody is going to copy what you’re doing and ultimately surpass you,” Fernandes said.
